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2018 (12) TMI 213 - HC - Income TaxComputation of capital gains u/s 48 - value of the 1/12 undivided share of land that was agreed to be transferred as per the agreement - right conferred on the tranferee - possession as handed over in pursuance to the agreement for sale as contemplated under Section 53A of the TP Act - Held that:- Tribunal went wrong in holding that the possession was not handed over in pursuance to the agreement for sale as contemplated under Section 53A of the TP Act. Once the sale agreement comes under the provisions of Section 53A of the TP Act, handing over of possession takes place and the provisions under Section 2(47) would squarely apply. That apart, the argument of the learned Senior Counsel for the assessee that contract was subsequently rescinded will not be of any help because the contract was rescinded only subsequent to the assessment year and what we are concerned for the purpose of the Act is the transactions which took place during the assessment year. The fact that the contract was subsequently terminated on mutual consent will not improve the case of the assessee to wriggle out of the the purview of Section 2(47) of the Act and the liability to pay tax on short term capital gains under Section 45 of the Act. Returns were filed there was a right conferred on the tranferee as per Section 53A of the T.P. Act. The transferor though subsequently was absolved from the rigour of Section 53A; in the close of assessment year was obliged to return the capital gains as per Section 2(47) (v). The IT Act by the definition clause includes a transaction in accordance with Section 53A as a transfer in relation to a capital asset. The consequence flowing from the inclusive definition has to be given effect as on the subject assessment year and the transferor being absolved subsequently from the rigour of Section 53A as against the transferee is of no consequence in applying the rigour under the taxation enactment. The transaction failed and the parties settled between themselves, but the voluntary act of the parties cannot efface the tax liability. We hence answer the questions of law on the facts arising in the above case against the assessee and in favour of the revenue. It is however pertinent to note that capital gains can be calculated only after computing the value of the 1/12 undivided share of land that was agreed to be transferred as per the agreement, and computation made in accordance with Section 48 of the Act. Hence, the appeal is only to be allowed setting aside the order of the Appellate Authority and the Tribunal. The matter is remitted to the Assessing Officer for the sole purpose of computation of capital gains under section 48 after taking into account the value of 1/12th share in the landed property that was agreed to be sold.
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